Flextronics and Redbox in Successful Partnership to Build DVD Rental Kiosks zssssssss

Redbox chose Flextronics
because of its design
innovation, advanced
manufacturing and
sophisticated supply chain
capabilities. The flexibility
and responsiveness of the
Flextronics operation was a
good fit for a small company
like Redbox. This partnership
allowed Redbox to focus on
technology innovation and a
unique business model that
led directly to its business
Flextronics and Redbox in
Successful Partnership to Build
DVD Rental Kiosks
Creative Design and Lean Manufacturing key to meet aggressive market expansion.
Redbox Automated Retail collaborated with Flextronics to design an exciting new family of DVD rental kiosks.
Redbox needed a strategic outsourcing partner like Flextronics to develop an optimized supply chain that included
Lean manufacturing and to drive the development and production of kiosks for their end customers to meet a very
aggressive marketing timeline.
Business Challenge
Redbox Automated Retail, LLC, is a leading vendor of rental DVDs through automated kiosks. It is a wholly owned
subsidiary of Coinstar, Inc. With kiosks active in more than 14,000 locations in North America, Redbox has served
more than 40 million distinct customers. Redbox continues to revolutionize the DVD rental industry with kiosks
featured in the nation’s leading grocery stores, convenience stores, discount stores and other locations nationwide.
Redbox got its start with the launch of its DVD rental kiosks in McDonald’s locations in Denver, Colorado;
Minneapolis, Minnesota; and Houston, Texas. Redbox needed a solution that was highly scaleable and able to
increase DVD capacity over existing machines as well as improve overall product functionality for kiosks located
primarily at McDonald’s restaurants. Redbox was faced with an aggressive advertising campaign deadline set forth
by McDonald’s. In order to proceed, it was important that at least 80 percent of the target installed base was
operational before the launch. Six months before the launch, Redbox still needed to decide what platform would
serve them best throughout a major national expansion.
Redbox realized that partnering with Flextronics offered many advantages. Outsourcing with an experienced
contract manufacturer would reduce costs and improve process efficiencies enabling them to grow in scale and
increase the quality of the software, hardware and customer interface.
“We originally started to work
with Flextronics only as a
backup plan just in case we
could not get a machine in
working order in time for April,
but after they delivered in eight
weeks what it took other
companies close to a year, we
were amazed. We were
accustomed to slow response
and poor service that what the
team in Creedmoor did was
nothing less than a miracle.”
Gregg Kaplan
CEO, Redbox Automated Retail
Flextronics Solution
Flextronics collaborated with Redbox to design and implement a two-part supply chain strategy:
1. Developing a new design and sourcing the BOM
2. Taking prototype to full production
Developing a New Design and Sourcing the BOM
The kiosk that was initially used in the first test market had a limited capacity of only 100 disks. Throughout the test
it became obvious that the inventory was not large enough to satisfy the growing interest in Redbox.
Redbox needed to decide how the new demand could be addressed, and engaged numerous options from around
the world. One of the options was a design that was developed by GetAMovie, Inc., in conjunction with the
Flextronics site at Creedmoor, North Carolina. Redbox was intrigued by the initial prototype and requested a smaller
version of the prototype that would be more fitting for a major rollout. The system had to be redesigned and
integrated with front and back-end server software in a very short period of time.
Within eight weeks, GetAMovie and Flextronics were able to build a new prototype with a capacity of 500 DVDs. Not
only was the hardware completed but the system was integrated with the server-side software to manage the
inventory from a central location. Within another eight weeks, five more machines needed to be built to demonstrate
and validate the manufacturability of the product. At that point, there were only eight weeks left to ramp up
production and deliver product for a market launch. Flextronics and GetAMovie designed this kiosk, developed the
server and machine side-software, performed the system integration and managed all the testing and regulatory
approval processes. The product roll out was timed with a McDonald’s advertising campaign that promoted Redbox
kiosks as a cornerstone for a successful location.
Redbox offered McDonald’s customers the ability to pick up and drop off DVDs from any location. Flextronics
developed two designs:
• DVD rental kiosk - indoor (32”W X 26”D X 66”H)
• DVD rental kiosk - outdoor with heating and cooling ( 32”W X 31”D X 66”H )
They were small footprint kiosks with rental capacity of 420 DVDs and the ability to sell 84 DVDs. The design
featured a unique Quick Load Module for reloading the unit with an additional 74 rentals.
Leveraging the power of Flextronics’ multibillion dollar purchasing network, the team developed a complete
Approved Vendor List (AVL) and sourced all the required materials from qualified vendors.
Taking a Prototype to Full Production
“Flextronics has proven that
they can offer in-house
excellence in enclosure and
sheet metal capabilities and
new product introduction
expertise to meet the needs
of our complex system
integration requirements.
Redbox has deployed
kiosks and intends to replace
all of its currently deployed
kiosks with the Flextronicsmanufactured systems. We
named Flextronics as the
exclusive manufacturer of
our automated DVD rental
kiosks because of their
commitment to quality and
critical time-to-market
Kiosk customers gain value from having a partner like Flextronics who can manage all technical aspects of a kiosk
project. This includes system design, manufacturing, software development, integration and regulatory and ADA
compliance. We apply our deep expertise to designing kiosks for any type of facility–indoor or outdoor. Our team of
engineers and designers offers complete kiosk manufacturing solutions from components to customized enclosures,
providing you with a kiosk designed specifically to meet your business needs. And, we can also integrate your
unique branding elements into the kiosk design to further your point-of-sale marketing efforts.
Redbox benefited from the Flextronics Lean Enterprise (FLE), Flextronics’ implementation of Lean manufacturing
principles with the quality rigors of Six Sigma. Flextronics facilities worldwide have implemented FLE, which aims to
reduce human and process errors as well as all non-value adding activities (waste) from the supply chain.
Regardless of location, Flextronics sites show strong implementation of Lean principles such as:
• Design for Six Sigma (DFSS) projects
• Takt time rhythm
• Define, Measure, Analyze, Improve, Control
(DMAIC) projects
• 99-second changeover lines
• Cellular manufacturing
• Supermarkets
• Error-proofing techniques
• Water spider
• Kanban cards
These are some of the many Lean Six Sigma fundamentals that made Flextronics Creedmoor visually and
Franz Kuehnrich
VP of Engineering
Redbox Automated Retail
operationally different from traditional electronic manufacturers.
The process of taking the prototype to full production was complex and included many key processes, functions and
• FMEA analysis
• Test and manufacturing design inputs
• Environmental assessments
• Test and manufacturing implementation
• Regulatory assessments and management
• Vendor selection
• Additional design resources
• Quality controls
• EC management
• PCB and software design
• Turnkey design of enclosures
Post Operations
• Machine level software
• Redesign for cost reductions
Advanced Machine Design
New Product Introduction (NPI)
• Concepts
• Turnkey NPI services, quick prototyping and
manufacturing introduction
• DFx
• Design
Printed Circuit Board Assembly
• Prototyping
• Design cost reductions
Integration and Delivery Supply Chain
• OEM Equipment – PC, APC, UPS, power suppliers,
motors and touch screens
• Cabinet and sheet metal
• Cable assemblies
• Low complexity printed circuit board assembly
• ICT and functional testing
Systems Integration
• Level 5 systems integration
• Final assembly and test
The initial production ramp was five units per week which quickly grew to 60 units per week. Today Flextronics
produces 120 units per week.
An Optimized Supply Chain
Production units are stored in warehouses until they are shipped. Redbox communicates shipment needs on a
regular basis. Flextronics’ supply chain manages the process to meet demand using level-loading and other
principles. Redbox has complete visibility into what has shipped in the past week and what is planned to ship in the
current week.
Some key results from the implementation of Lean principles were:
• Meeting a very aggressive marketing campaign timeline
• Increasing machine capacity by 400 percent
• A reduction in material costs of up to 25 percent over time
• Machine-related problems resulting in field calls decreased to only 0.25 percent (the Flextronics team is focused
on making that as small as possible)
• Customer satisfaction data from Redbox to Flextronics shows a strong relationship
Redbox kiosks can now be found in over 14,000 locations in North America. Sites include Walmart, Walgreens,
McDonald’s, SuperValu, Stop & Shop, Giant, SaveMart, Harris Teeter, Shaw’s Supermarkets, Hannaford
Supermarkets, Hy-Vee and Wegmans.
The Future: Scaling with Redbox
By 2009, Redbox expects to be situated in over 20,000 locations. Redbox is moving towards deploying kiosks
manufactured by Flextronics in all locations. Flextronics shipped over 16,000 units to date and is expected to ship its
22,000th unit before the end of 2009. The teams are working on next generation designs which will add functionality
while boosting DVD capacity. The teams are also focused on scaling production to support international market
opportunities for Redbox.
For more information, please visit
www.flextronics.com or follow us on
Twitter @flextronics
Flextronics is a leading end-to-end supply chain solutions company that delivers design, engineering, manufacturing and
logistics services to a range of industries and end-markets, including data networking, telecom, enterprise computing and
storage, industrial, capital equipment, appliances, automation, medical, automotive, aerospace and defense, energy,
mobile, computing and other electronic product categories. Flextronics is an industry leader that helps its customers
design, build, ship, and service their products through an unparalleled network of facilities in more than 30 countries and
across four continents.
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